16th hike in 16 days: Petrol, diesel prices continue to soar, touch new highs

Despite nation-wide outrage and criticism, petrol and diesel prices were again hiked on Tuesday for the 16th consecutive day. Petrol price in Delhi today is Rs 78.43 a litre while it is being sold at the rate of Rs 86.24 a litre in Mumbai. In Delhi-NCR petrol is being sold at Rs 79.19/litre, Rs 78.95/litre, Rs 78.87/litre and Rs 78.75/litre in Faridabad, Gurgaon, Noida and Ghaziabad respectively. 

The price of petrol in Kolkata is Rs 81.06/litre and Rs 81.43/litre in Chennai, according to Indian Oil Corporation. In Bengaluru, one litre of petrol costs Rs 79.71. The revised prices came into effect at 6 am today. 

Diesel, which is what most transport vehicles use, also touched a new high. While the price of diesel in Delhi is Rs 69.31/litre and it is Rs 73.79/litre in Mumbai. Diesel in Kolkata and Chennai is being sold at Rs 71.86/litre and Rs 73.18/litre respectively.  

Prime Minister Narendra Modi's Central Government has come under fire over fuel price hike. Union Petroleum and Natural Gas Minister Dharmendra Pradhan had earlier assured the public that the government will soon take out a solution to tackle the situation.

In April, Pradhan had said the Centre and the state governments have been considering bringing the petroleum products under the ambit of Goods and Services Tax. 

Last week, BJP President Amit Shah had said that a plan is being worked upon to check petrol prices in the country. Addressing the furore over fuel price hike, Shah had said that the government officials were taking the issue of fuel price hike seriously. 

States can cut petrol price by Rs 2.65/litre by giving up additional gains: SBI 

Meanwhile, a State Bank of India (SBI) report on Monday said that states can cut petrol price by Rs 2.65 per litre and diesel by Rs 2 a litre if they decide to forego potential additional gains out of high crude oil rates.

"Given that these revenue if foregone will not impact states fiscal position, we estimate that on an average, states can cut petrol prices by Rs 2.65/litre and diesel by Rs 2/litre, if the entire revenue gain was to be neutralised. This is the most plausible scenario under the current circumstances," the SBI report said.

It also said that one suggestion to further rationalise the petrol and diesel prices is to consider a pricing mechanism where VAT is imposed on base price only by states and not on prices inclusive of the Centre's tax. 

If this was the case, diesel prices could further reduce by Rs 3.75 a litre and petrol prices by Rs 5.75 per litre, it said. 

"However, if this was to happen, the state will have to forego Rs 34,627 crore of tax revenue / 0.2% of consolidated fiscal deficit of states," said Ecowrap.

On the other hand, if the Centre cuts the excise by Re 1, the loss of revenue will be to the tune of Rs 10,725 crore for every Re 1 cut in central excise and the amount will become twice if it cuts the excise duty by Rs 2. 

This will push up the deficit of Centre, unlike states, it added.

Petrol price has been hiked by Rs 3.80 a litre and diesel by Rs 3.38 in Delhi; and Rs 3.76 a litre on petrol and Rs 3.59 on diesel in Mumbai since state-owned oil firms ended a 19-day pre-Karnataka poll hiatus to resume daily price revision on May 14. The prices are at an all-time high.

(With PTI inputs)